Which of the Following Conclusions Are Correct

question 69

Multiple Choice

Which of the following conclusions are correct?

• A)Most of the volatility of the dollar value of the British asset can be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 1,125,000 ($)² and 2,500 ($)² respectively.
• B)Most of the volatility of the dollar value of the British asset can not be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 236,717 ($)² and 493,751 ($)² respectively.
• C)Most of the volatility of the dollar value of the British asset can NOT be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 125,000 ($)² and -127,500 ($)² respectively.
• D)Most of the volatility of the dollar value of the British asset can be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 125,000 ($)² and -127,500 ($)² respectively.

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Definitions:

External Failure Cost

Expenses related to products or services not meeting quality expectations post-delivery, encompassing returns, fixes, and warranty requests.

Quality Cost Report

A document that summarizes the costs associated with preventing, detecting, and correcting defective work, typically classified into prevention, appraisal, and failure costs.

Warranty Period

The specified time period during which a manufacturer or seller is obligated to repair or replace a product if it has defects.

Appraisal Cost

Expenses related to the evaluation and inspection of materials and products to ensure quality standards are met.